Bruce's Budget Battle

The prime minister delivered an intellectually robust, piercingly logical and commanding Budget presentation last Tuesday, but you would never know from the commentary about it. The Government's widening credibility deficit over the Dudus extradition/Manatt, Phelps and Phillips issue has added to our own peculiar challenge of assessing things outside a partisan context.

The truth is, a lot of people don't want to hear one damn from this Government, and every day that the Dudus affair lingers, the cynicism and mistrust deepen. This has made it extremely difficult to dispassionately discuss anything this Government does or says. We might as well face it.

So, before the prime minister opened his mouth last Tuesday, he stood condemned by many. Plus, people know him Government bruk and can't offer them many handouts. That his presentation was evidence-driven, well-argued and bold and incisive in its engagement with opposing ideas did not matter one bit to many people. They are just turned off and angry, and as we know emotions corrode the thinking process. Unfortunately, talk-show hosts, commentators and journalists are not exempt from this pitfall.

This will be a hugely unpopular column. But for any takers, I urge you to reason with me. The prime minister did not waste any time in getting to the heart of the issue: The 'tax, borrow and spend more' approach to budgeting was not on this year. It cannot be on in light of the global economic crisis, our home-grown economic malaise and our 'Heavy Manners' agreement with the International Monetary Fund (IMF).

Fiscal lifestyle

For the last 14 years consecutively, we have been spending more than our revenues can cover, the prime minister began by telling us. Our current expenditure has grown three times as fast as our revenues, he continued - 76 per cent versus 24 per cent.

"We have lived a fiscal lifestyle in which we put on weight but we don't grow. We accumulate fat but build no muscles," said Golding, a master wordsmith (Critics say that's all he is.) The prime minister calmly explained that in a previous era, we could go on ur super-spending ways because we could borrow from the international capital markets. When those markets closed and our export markets collapsed, that game was over. Our bauxite exports alone account for 50 per cent of our total export earnings.

How do you continue important social spending, offer a fiscal stimulus for production and growth and meet public-sector wage obligations when you are faced with such a crisis - and when you can't keep taxing the people? The Opposition has not identified what should be cut to accommodate increased spending in other areas. Indeed, they have noted how sharply reduced the Budget is. The Budget is bare bones. The Opposition debaters are not making an argument that there are gross areas of misallocation and distorted priorities.

Is it fair?

The prime minister correctly noted that the leader of the opposition in critiquing the Government made no mention of a global economic crisis. Is it fair to compare economic performance during a crisis period unlike any other in over 70 years, with relatively normal times? Is it fair to use aggregate comparative figures of economic decline, totally oblivious to what has taken place in the real world since 2007?

The prime minister decisively and conclusively answered opposition critics who pointed to the 2.7 per cent economic decline in Jamaica last year, noting first that 1.9 per cent of that was accounted for by the fallout in the bauxite/alumina sector alone. He then pulled on statistics from a number of developed countries - including Britain, Germany, Japan, Italy as well as Mexico, Trinidad (which has energy resources) and Barbados which declined to an even greater extent. Much-touted Barbados declined by as much as 5.3 per cent. Now in my book, if you are debating someone, you have to reckon with the hard evidence he brings. You can't ignore them and pretend that you didn't hear what was said or raise other issues.

The task of the Opposition is to demonstrate conclusively that the Government mismanaged the global economic crisis, that it took reckless policy decisions in its wake and that it did not do enough to insulate us from its shocks. Proving that the Government underestimated the impact of the crisis is not enough, for as the prime minister showed, even the IMF, World Bank and the United Nations had to revise their own targets and assessment as the crisis deepened. We need a national debate where debaters take on the ideas of opponents frontally and squarely, rather than raise red-herrings and engage in diversionary tactics.

Traditions of debating

If you have been following the trajectory of the Opposition's critique of the Government, you will see that Golding lived up to the best traditions of debating. He took on the major economic arguments and assumptions of the Opposition and dealt with them creditably. He stuck to fundamental issues.

The debate might have been dull and lifeless before the opposition leader spoke, but Golding certainly did not drop the ball. This country has been in denial on two critical issues which the prime minister faced courageously: the economy and crime.

The prime minister's presentation was irenic, not polemical; he reasoned rather than ranted. It was an excellent display of respect for the canons of public reason. We need to have a larger debate in this country on what is possible given current global realities and our own economic circumstances. We need to have dialogue with a greater respect for evidence and empirical data, rather than rely on gut feelings, intuition and supposition. The quality of public discourse needs to be considerably improved and we, in media, must play a critical role in this. Our tribal loyalties must not be allowed to get in the way.

Those interested in research and reason, rather than cultic party devotion, should read the just-released study, Achieving Fiscal Responsibility in Jamaica: the JDX and Beyond by the Caribbean Policy Research Institute (CaPRI). This important research paper, whose principal researcher was the University of the West Indies senior economics lecturer, Dr Damien King, draws heavily on cross-county studies. The study points to the fact that the country's average debt level over the last 10 years has been 115 per cent of GDP.

And what has been the result of this crushing debt burden? "Crumbling, inadequate infrastructure, declining quality and quantity of public services and rising rates of crime and violence. It is within this context that sustained economic growth has continued to elude Jamaica."

The People's National Party (PNP) and the Jamaica Labour Party (JLP) are agreed that there is no prospect of sustainable economic growth without containment of our debt - and control of our appetite for more debt. It must be explained to our people, in simple terms, that this means we can't spend for even every desirable and important thing until we are earning our way out of the crisis. Macroeconomic stability is not sufficient for economic growth, but it is certainly a necessary precondition. The Government's debt-exchange programme, which the CaPRI study hails, was a major initiative for dealing with this formerly intractable problem.

Macroeconomic stability comes with a price and, unfortunately, the poor pay disproportionately that price under our capitalist system. But that is the system of non-socialised production that the PNP itself is committed to, so it can't debate for more radical solutions such as debt repudiation and nationalisation of industry. As long as the parties continue to operate within the strictures of the neo-liberal capitalist model, they have to put pressure on the backs of the poor to achieve macroeconomic stability. A so the thing set!

The CaPRI study says the major reason for our unsustainable debt levels are the liabilities contracted outside of central Government ... the very same point the prime minister made in his speech, and that is why the Government has decided to sell those assets and to make those kept economically viable (like JUTC, which means increased bus fares.) We have to learn some basic laws of economics.

When Ralston Hyman, who should know better, ask why we are not stimulating the economy like the United States and other developed countries, I have to shake my head. Ralston is not a fool. As desirable as it is, where would the Government find the funds to adopt counter-cyclical policies at this time and under a stringent IMF agreement? We really need to get serious in our economic discourse. For years everybody was singing the mantra of low interest rates. Now that interest rates are coming down, people are switching to say "low interest rates alone can't solve the problem".

It would be good to subsidise not only early-childhood, primary and secondary but also university education. It would be good to do a number of things to help the poor beyond the measures the prime minister announced. Every politician would love to spend more. But it's not just politics which is "the art of the possible". Economics is also.

Someone needs to engage directly the arguments Bruce Golding offered after carefully reading his presentation. His implicit call for stronger hard policing and for sending clear signals to criminals and terrorists, expectedly, received reflexive opposition from the very powerful human-rights lobby. The Gleaner can continue to scream the murder figures from its front pages, but as long as this county does not adopt, as a part of a holistic package of solutions, stronger measures against hardened criminals and gang members, we will forever be calling on the Government to do something and the Government will continue to flounder and look clueless.

There is certainly no huge amount of money for "social-intervention programmes". And the PM carefully outlined a number of non-hard-policing things already being done without much effect at all on our bloodthirsty criminals. The prime minister is right: "We need a national consensus on the type of counteroffensive that must be mounted." I am not holding my breath, for the human-rights fundamentalists are not going to cede anything. The Opposition must support the anti-crime bills if we are to see any dent in crime.

If we can't agree on crime, for reason's sake, let's at least accept some economic common sense.